The claimant, who was born on January 13, 1911, was a self-employed
casualty insurance salesman whose first month of entitlement to old-age
insurance benefits (OAIB) was September 1974. The Social Security
Administration determined that the claimant's benefits for the years 1979
through 1982 were subject to work deductions because of his excess
earnings in those years. Sections 203(b) and (f) of the Social Security
Act require deductions against earnings in excess of an amount considered
exempt. The claimant appealed, contending that because virtually all of
his income from self-employment for the years 1979 through 1982 was from
renewal commissions on casualty insurance policies that he had sold prior
to his first month of entitlement to OAIB, such income did not constitute
earnings for deduction purposes under 20 CFR 404.429(b)(2)(ii). Despite
the claimant's contention to the contrary, the AC observed, under the
guidelines in 20 CFR 404.429(b)(2)(ii), that, in generating these
renewals, the claimant had performed "significant services" after his
first month of entitlement to OAIB. Consequently, the AC found that the
renewal commissions for casualty insurance received by the claimant during
the years 1979 through 1982 were countable for deduction purposes in the
year of receipt, even if the original policies were sold prior to his
first month of entitlement to OAIB. Accordingly, the AC held that
work deductions were imposable against the claimant's benefits for the
years 1979 through 1982 because of his excess earnings in those years.

The claimant was a self-employed casualty insurance salesman whose first
month of entitlement to OAIB was September 1974. The evidence of record
showed that he had reported self-employment income of $9,186 for 1979,
$9,528 for 1980, $13,762 for 1981, and $7,663 for
1982[1] to the Internal Revenue
Service. When SSA notified the claimant that his benefits for the years
1979 through 1982 were subject to work deductions because of his excess
earnings in those years, the claimant appealed. He contended that most of
his income from self-employment for the years 1979 through 1982 was not
attributable to "significant services" performed after September 1974, and
thus was excludable, under § 404.429(b)(2)(ii) of Regulations No. 4, in
determining his gross earnings for deduction purposes for those years. Not
counted as "significant services" for a nonfarmer under that section of
the regulations are those activities that are related solely to protecting
an investment in a currently operating business or that are too irregular,
occasional, or minor to be considered as having a bearing on the income
received.

The claimant maintained that he had written little new insurance since
1977 and that virtually all of his business for the years 1979 through
1982 consisted of renewal commissions on policies that he had written
before 1977. The processing of such renewals was automated. His health had
been poor since 1977, as he had suffered from both a heart and a lung
condition. He stated that all he had to do to earn the commissions was to
go to the office twice a week for an hour to an hour and a half, look over
the computer renewals, and file them away. While he stated that the
renewal accounts had been decreasing, his gross receipts had been rising
since 1977.

The AC concluded that the claimant had not shown that he had not rendered
"significant services" in self-employment during the years in question,
even assuming, arguendo, that virtually all of his business for the
years 1979 through 1982 consisted of renewal commissions on casualty
insurance policies that he had first written prior to September 1974. All
of the examples provided in § 404.429(b)(2)(ii)(B) of Regulations No. 4
anticipate that the self-employed individual will perform only occasional,
irregular, or minor services and that most of the work will be performed
by others. In this case, the claimant did all of the work (albeit
not particularly difficult work), as evidenced by the fact that he did not
have employees or outside contractors. His expenses for an automobile,
entertainment, promotions, and other travel also suggested that the
claimant had more than a passive role with respect to his business.

In addition, the AC did not believe that it was pertinent that much of
the claimant's business for the years 1979 through 1982 had consisted of
renewals of casualty insurance policies that he had written prior to 1977,
as renewals of casualty insurance policies are generally not similar to
renewals of life insurance policies. The AC noted that casualty insurance
differs from life insurance in a number of ways: it covers a different
risk, it has a shorter duration (terms of 6 to 12 months subject to new
terms upon expiration), and there is generally is no vested right to the
renewal commission for the salesman who sold the first policy. In other
words, while a life insurance salesman could receive a renewal
commission for no reason other than that he or she was the one who had
sold the first policy, a casualty insurance salesman would have no
such right, unless he or she had performed some service in obtaining the
renewal. In effect, the casualty insurance salesman generally sells a new
policy each time the insurance is renewed.

Consequently, none of the commissions received by the claimant in this
case could be excluded from consideration as earnings for deduction
purposes. The AC thus found that the claimant had earnings of $9,186 in
1979, $9,528 in 1980, $13,762 in 1981, and $13,090 in 1982. Since the
annual earnings limitation was $4,500 in 1979, $5,000 in 1980, $5,550 in
1981, and $6,000 in 1982, the AC concluded that deductions on account of
work were imposable against the claimant's benefits for such years, in
light of the earnings that had been established for the claimant in this
case.

[1] The Social Security
Administration subsequently determined that the claimant had additional
net earnings from self-employment of $5,427 for 1982; therefore, the
claimant's 1982 earnings for deduction purposes were $13,090.